Greek stocks soar; Europe markets pare losses

Nokia, Bank of Ireland down; Greece ‘troika’ talks conclude

MADRID (MarketWatch) — European stock markets pared losses late in the trading session Friday, as disappointment over U.S. jobs data was tempered by a statement from Greece that “troika” talks concluded positively, sending shares in Athens soaring.

The Stoxx Europe 600 index (STOXX600) trimmed its decline, but still closed down 0.4% at 273.67, weighed by losses in several heavyweight Nordic stocks.

Wall Street opened with a steep drop after jobs growth slowed sharply in May. Nonfarm payrolls rose a seasonally adjusted 54,000, the smallest gain since September and far below the 125,000 expected by economists polled by MarketWatch. Read more about U.S. jobs report.

Steen Jakobsen, chief economist at Saxo Bank, said the data confirmed a string of weak economic figures and surveys seen recently, not just in the U.S., but around the globe.

“This experiment of stimulus and the wealth effect is not working. There is a huge gap between Wall Street and Main Street,” he said.

Jakobsen predicts a 5% to 10% correction in the Standard & Poor’s 500 index
SPX, +1.32%
“before we see any new stimulus going ahead.” For Europe, he sees a similar correction.

“Generally speaking, Europe will follow through. World growth is coming down dramatically,” he said.

The other focus for Europe was Greece. The Greek ASE Composite index (COMPO) surged near the end of trading to close 4.4% higher after the Greek Finance Ministry said a review of its implementation of reforms by the European Union, European Central Bank and International Monetary Fund concluded “positively.” Read more about talks in Greece,

Those talks were related to the current €110 billion ($160 billion) rescue plan.

As markets closed, the EU, ECB and IMF issued their own statement, saying they had reached broad staff-level agreement with Greek authorities on necessary economic and financial policies.

Greek stocks had been rising throughout the day on speculation that progress would be made on further aid for the embattled euro-zone country.

Jakobsen said the market has had “so many false breakthroughs, it wants to see a plan implemented. It’s going to be a short-lived rally, if any, if the market knows Greece is on its way to being re-profiled inevitably. Getting new promises from Greece in terms of what they’ll do won’t help me as an investor. We’ve got worse and worse [global] data coming out. Greece on its own can’t help.”

Also higher, shares of Coca-Cola Hellenic Bottling Co. SA
CCHBF, -12.46%
rose 2% after being upgraded to buy from hold at Citigroup.

Nordic stocks drop, banks lower

Many Nordic stocks were particularly hard hit as markets reopened after a Thursday holiday and caught up to the heavy losses seen in Europe the prior day. Shares of Finnish mobile-phone maker Nokia
NOK, +2.17%
(NOK1V), which warned on second-quarter sales earlier in the week, fell 4.9%.

Losses were also seen among Swiss stocks, as those markets also reopened after Thursday’s break, with UBS AG
UBS, +0.89%
(UBSN) down 2.3%. The Swiss SMI index (SSMI) closed down 1.4% at 6,407.39.

Shares of Bank of Ireland PLC (BIR)
IRE, +0.35%
tumbled 13% after the firm released more details on its capital-raising plans. Earlier this week, the lender announced those plans would result in some junior-debt holdings of up to 90%. The details released Friday show the plan is structured to encourage bondholders to swap their debt into new equity, rather than accepting cash.

In Frankfurt, the German DAX 30 index (DAX) closed up 0.5% at 7,109.03. Shares of Commerzbank AG (CBK), which is seen as one of the European banks most exposed to Greek debt, soared 4.3%.

On the downside, shares of RWE AG (RWE) fell 2.7% and E.On AG (EOAN) slid 1.2%. Shares of the utilities have each lost more than 6% this week, after an announcement by the German government on Monday that it has set a final date for shuttering its nuclear reactors. Both RWE and E.On are among the utility companies that run nuclear plants in Germany.

Among gainers in London, Autonomy Corp. PLC (AU.) rose 4% after it announced the completion of its acquisitions of certain assets of Iron Mountain Inc.’s
IRM, +0.59%
digital division. Autonomy said it expects to achieve cost savings of $40 million per annum over the first year.

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